BLOEM WATER REPORTINGSTRATEGIC (BUSINESS) PLAN,

ANNUAL REPORT/PERFORMANCE 2011/2012, 2013/2014 BUDGETS AND TARIFF INCREASES

PRESENTATION TO THE PORTFOLIO COMMITTEE ON PRESENTATION TO THE PORTFOLIO COMMITTEE ON

WATER & ENVIRONMENTAL AFFAIRS

18 April 2013p

Presented by: Chairperson: Mr TB PhitsaneActing Chief Executive: Ms T Kgantsi

Chief Financial Officer: Mr OJ Stadler

Chairperson:

Contents1. Overview2. Minister’s Directivess e s ec es3. DWA Infrastructure Programmes4. Alignment of Bloem Water Strategy with Government

O t 2011/12Outcomes – 2011/125. Strategic Performance to date (2012/13)5 Financial Performance 2011/125. Financial Performance 2011/126. CAPEX Performance7. 2013/2014 Budgets8. Skills Development/Job Creation9. Compliance and Governance10 C t Ch ll10.Current Challenges11.Sustainability Initiatives/CSI

Overview of Bloem Water• Bloemwater was established as a Water Board in 1991, in terms with

the Water Services Act (Act 108 of 1997)Cl 29 f W S i A• Clause 29 of Water Services Act:– The primary activity of a water board is to provide water services

to other water services institutions within its AoS.o o a u o o• Clause 30 of the Water Services Act:

• (2) Other activities of a water board may include, but are notli it d tlimited to-• (a) providing management services, training and other support

services to water services institutions, in order to promote co-, poperation in the provision of water services;

• Clause 32 of the Water Services Act:D ti f t b d• Duties of water boards• Every water board – must enter into written contracts when

performing its primary and other activitiesp g p y

Overview of Bloem Water (Cont)• Clause 34 of the Water Services Act:

• (2) For the purposes of subsection (1) (c) – striving to be( ) p p ( ) ( ) gfinancially viable: a water board is financially viable if it is able to:• (a) repay and service its debts;

(b) recover its capital operational and maintenance cots• (b) recover its capital, operational and maintenance cots• Vision

Assuring sustainable provision of quality water services, for life!Assuring sustainable provision of quality water services, for life!

• MissionTo create a leading, value-driven, effective and responsive Institution using adaptive best practice methods in anticipating tomorrow’s problems todayp y

Overview of Bloem Water (Cont)• Areas of service – Central and Southern Free State• Local Municipalities

- Mangaung- Kopanong

Mantsopa- Mantsopa- Naledi

• Other: as Project Implementing Agent (PIA) for DWAj p g g ( )– Setsoto Local Municipality– Masilonyana Local Municipality– Mohokare Local Municipality– Moqaka Local Municipality

Area of Services

Area of Service (Cont)Water Supply Scheme Municipality Locality/Consumers

• Orange River • Kopanong • Bethulie

• Gariep

• Philippolis

• Trompsburg

• Jagesrfontein

• Fauriesmith• Fauriesmith

• Springfontein

• Reddersburg

• Edenburg

• Caledon River • Naledi • Dewetsdorp

W• Wepener

• Caledon River • Mangaung Metro • Bloemfontein

Area of Service (Cont)Water Supply Scheme Municipality Locality/Consumers

• Modder River • Mantsopa • Accelsior

• Mangaung Metro • Thaba Nchu

• Botshabelo

Rietfontein; Kommissiedrief• Rietfontein; Kommissiedrief

• Springfontein; Potsane; Mariasdal

• Klipfontein; Tiger River; Moroto

• Woodbridge 1 & 2; Longridge

• Yoxford; Feloana; Merino; Rakhoi

• Gladstone; Paradys; Talla; Sediba• Gladstone; Paradys; Talla; Sediba

• Balaclava; Ratabane; Middeldeel

• Tweefontein; Spitskop; Rooibuilt

• Eureka; Houtnek; Kgalala; Bofulo

• Nogaspost; Moragu; Modutung; Thubisi

Water Supply Schemes

Water Supply System(Cont)Region Source Pumping Treatment Storage Area of ServiceRegion Source Pumping

SystemTreatment Storage Area of Service

• OrangeRiver

• Orange River• Boreholes

• Driefontein• Volglfontein• Tolhuis

• Philippolis x 1.2 Ml/d

• Reseviors x 2 • Philippolis

• Tolhuis

• Gariep Dam • Gariep • Gariep x 2.8 Ml/d • Reseviors x 2 • Gariep

• Orange River• Boreholes

• SAR• Kleinzuurfontein

• Bathulie x 6.0 Ml/d

• Reserviors x 5

• Trompsburg• Springfontein• Boreholes • Kleinzuurfontein

• Hennie Steyn• Branaveinskul

/d 5 • Springfontein

• Jagersfontein Mine• Boreholes

• Lemoenkloef • Jaggerfontein x 2Ml/d

• Reserviors x 1

• Jagesrfontein• Fauriesmith

• Kalkfontein

• Caledon River

• Welbedact Dam• Caledon River• Knellpoort Dam

• Tienfontein• Novo• Reddersburg

• Welbedact x 145 Ml/d

• Reserviors x 7

• Bloemfontein• Dewetsdorp• Wepener• Knellpoort Dam

• Boreholes• Reddersburg• Edenburg• Dewetsdorp• Raw and Clear

Water

• Wepener• Reddersburg• Edenburg

• ModderRiver

• Groothoek Dam• Rustfontein Dam• Knellpoort Dam• Boreholes

• OK• Groothoek• Lesaka• Raw & Clear

Water

• Rustfontein x 100 Ml/d

• Groothoek x 18 Ml/d

• Reseviors x 6 • Thaba Nchu• Botshabelo• Villages

MINISTER’S DIRECTIVES

• “actions to be taken by Water Boardsin fulfilling the new mandate andimplementing the rural water supplyp g pp yprogramme and filling the gaps inwater provision”water provision

12

Support/Contribution to DWA• Engagements with DWA:

– Technical support servicesProject Implementing Agent services– Project Implementing Agent services

– Plant operations and maintenance– Plant and infrastructure audits– Occupational Health and Safety Risk Assessment– Blue Drop Systems/Certifications programs– Water Safety PlanningWater Safety Planning– Process controller mentorship and training– Borehole management

S h l h l h d h i i– Schools health and hygiene service– Water conservation and Water Demands Management programs– Drinking Water Quality testingg Q y g– Development of SOP’s– Asset Management Information Systems

Blue Drop Performance - 2012

Blue Drop Performance - 2012 (Cont)

Blue Drop Performance - 2012 (Cont)

2012 Blue Drop Scores – BW WTW

Drinking Water Quality Results - BW

98

Drinking Water Quality Results

97

97.5

96

96.5

95

95.5

94

94.5

93.5

Bethulie WTW Welbedacht WTW Rustfontein WTW

Annual AVG DWQ Compliance (%) Target

Interim/Intermediate Water Supply Programme – Xhariep DistrictProgramme – Xhariep District

Bulk Water Supply Interventions

Sewer Treatment Works Interventions

Bulk Water Supply Interventions

Water Conservation/Water Demand Management InterventionsManagement Interventions

Strategic Goals linked to Ministerial

BLOEM WATER GOALS MINISTERIAL OUTCOMES DEPARTMENT OF WATER AFFAIRS GOALS

outcomes and DWA goalsBLOEM WATER GOALS MINISTERIAL OUTCOMES DEPARTMENT OF WATER AFFAIRS GOALS

Goal 1:Manage financial affairs to meetcurrent and future obligationsStrategic result:

MO B : Contribute to an efficient, competitive and response economic infrastructure networkMO A: Environmental assets and natural

SO 6.5: To improve corporate governanceSO 6.6: To improve financial managementSO1.1: to ensure the availability of water supply for domestic useStrategic result:

Financial sustainabilityMO A: Environmental assets and natural resources that are well protected and continually enhancedMO D: Responsive, accountable, effective and efficient local government system

supply for domestic use

Goal 2:Build, operate and maintaininfrastructure

MO B : Contribute to an efficient, competitive and response economic infrastructure network

SO 1.1: to ensure the availability of water supply for domestic useSO 1 2: To improve access to water for ruralinfrastructure

Strategic result:Ensure universal access to safe andaffordable water

infrastructure networkMO A: Environmental assets and natural resources that are well protected and continually enhancedMO D: Responsive, accountable, effective

d ffi i t l l t t

SO 1.2: To improve access to water for rural development and productive useSO 1.3: To improve access to water for key growth pointsSO 2.2: To ensure balance of water supply

d d dand efficient local government system and demand

Strategic Goals linked to Ministerial t d DWA l (C t)

Goal 3:Ensuring sustainable and equitable water

MO B : Contribute to an efficient, competitive and response economic

SO1.1: to ensure the availability of water supply for domestic use

outcomes and DWA goals (Cont)Ensuring sustainable and equitable waterresource managementStrategic result:Securing the water value chain

competitive and response economic infrastructure networkMO A: Environmental assets and natural resources that are well protected and continually enhancedMO F: Create a better South Africa and

supply for domestic use SO 2.1: Setting a strategic framework for water management in the countrySO 2.7: To improve the management of water resourcesSO 5.2: To contribute to the water agenda in O C eate a bette Sout ca a d

contribute to a better and safer Africa and worldMO G: Vibrant, equitable and sustainable rural communities

SO 5 o co t bute to t e ate age dathe global system of governanceSO 6.5: To improve corporate governanceSO: 2.5 To ensure the protection of water resources

Goal 4: MO E: Decent employment through inclusive SO 6.5: To improve corporate governanceTransformation/businessprocess/research and developmentStrategic result:Achieving an aligned and effectiveinstitution through optimization of

p y geconomic growthMO F: Create a better South Africa and contribute to a better and safer Africa and worldMO G: Vibrant, equitable and sustainable

p p gSO 6.1: To achieve a high performance cultureSO 3.1: To improve the regulation of the water sector

business processes rural communitiesMO C: Sustainable human settlements and improved quality of household life

Goal 5Engaging in Strategic Partnerships

MO E: Decent employment through inclusive economic growth

SO 6.5: To improve corporate governanceSO 4.1: To ensure the provision of local

Strategic result:Benchmarking, knowledge sharing andpursuing international best practices.

MO F: Create a better South Africa and contribute to a better and safer Africa and worldMO G: Vibrant, equitable and sustainable rural communities

government institutional supportSO 5.2: To contribute to the water agenda in the global system of governanceSO 5.3: To leverage international resources for the South African water sector

Summary of Performance Against Strategic Goals and audited performance rating Goals and audited performance rating

2011/12

STRATEGIC GOAL   RATING PER CONTRACT KPMG RATING %

1 Manage financial affairs to meet current and future obligations 88 67 76

2 Build, operate and maintain infrastructure 84 74 88

3 Ensuring sustainable and equitable water resource management 53 45 85management

4 Transformation/Business processes/research and development 89 79 89

5 Engaging in strategic partnerships 51 44 86

TOTAL ENTITY PERFORMANCE 365 30985%OVERALL PERCENTAGE ACHIEVED   

Summary of Performance yAgainst Strategic Goals - YTD

STRATEGIC GOAL MID‐YEAR

1 Manage financial affairs to meet current and future obligations 95.6%

2 Build, operate and maintain infrastructure 86.7%

3 Ensuring sustainable and equitable water resource management 91.6%management

4 Transformation/Business processes/research and development 98%

5 Engaging in strategic partnerships 85.5%

TOTAL ENTITY PERFORMANCE91.48%

OVERALL PERCENTAGE ACHIEVED   

Chief Financial Officer:

Financial Performance - Annual Financial Statements 2011/12

Note 2012 2011R’000 R’000

Statement of comprehensive incomefor the year ended 30 June 2012

Income aligned to volumes budgeted and tariffExpenditure aligned to raw water transfer, treated volumes and budget

Revenue 325 160 274 452

Water purchased (25 272) (22 724)

Gross income 299 889 251 728

Increase in Implementing agent fees

HR expenditure accommodated pension fund valuation movements, filling of vacant positions

Other operating income 4 505 2 749Chemicals (14 566) (13 616)Depreciation (37 344) (35 113)Distribution cost (9 152) (7 576)Energy cost (51 393) (38 467)

filling of vacant positions

Improvement of provision for bad debt

Repairs and maintenance (10 513) (6 956)Staff costs (79 659) (67 393)Impairment of trade receivables 3 298 (14 965)Operating expenses (22 933) (21 162)

Operating profit 11 82 131 49 229

Finance revenue high for interest charges on debtors. Finance cost – payment of loans

Operating profit 11 82 131 49 229

Finance income 12 19 309 18 480Finance costs 13 (17 934) (23 906)

Profit for the year 83 507 43 803

Statement of financial positionat 30 June 2012

N t 2012 2011Note 2012 2011

R’000 R’000

Assets

Non current assets marginally lower than budget as not all CAPEX projects were concluded

Non-current assets 640 578 598 825

Property, plant and equipment 2 627 510 591 141 projects were concludedDefined Benefit asset pension fund improved

Employee benefits 16 13 068 7 684

Available‐for‐sale investments 3 - -

Current assets marginally higher than budget

Mangaung late payment of R35 mil

Current assets 321 966 298 078

Inventories 4 8 119 6 669

Trade and other receivables 5 75 809 35 101 R35 mil

Funding committed for loans and CAPEX projects

Trade and other receivables 5 75 809 35 101

Short term investments 6 176 023 206 491

Cash and cash equivalents 7 62 015 49 817

Total assets 962 544 896 903

Equity and liabilities

Capital and reserves 684 177 600 671 Reserves improved from Capital and reserves 684 177 600 671

Retained earnings 471 709 389 030

Capital replacement fund 87 350 87 350

Reserves improved from retained earnings

Capital development fund 70 217 70 217

Insurance fund 7 301 6 474

Urban development fund - -

Asset DWAF reserve fund 43 579 43 579

Transfer to insurance Fund

Revaluation reserve 4 021 4 021

Available-for-sale investment fair value reserve - -

Non‐current liabilities

Interest bearing loans and borrowings 8 199 449 229 174

Non current liabilities aligned with revised implementation plan and budget

Current liabilities 78 918 67 058

Trade and other payables 9 43 561 33 778Current portion of interest bearing loans and borrowings 8 35 357 33 280

Accruals for Implementing Agent projects, Eskom, etc

Current portion of interest bearing loans and borrowings 8 35 357 33 280

Total equity and liabilities 962 544 896 903

Current liabilities aligned with revised implementation plan and budget

Indicators and Financial Actions• Indicators and Financial Actions

- Continued Solvency- Ongoing Liquidityg g q y- Remain a Going Concern- Debtors position worsened slightly- Cash position reduced marginally- Debt ratios remained high due to CAPEX requirementsDebt ratios remained high due to CAPEX requirements- Sales volumes aligned to budget- Streamlining of the pension fund in terms of Funding

the deficit.

• Auditors opinion

- Unqualified report- No Matter of emphasis- Opinion that financial statements fairly presents the financial position

10/11 & 11/12 CAPEX - TOTAL/ /

R 200 000 000.00

2010/11 and 2011/12 Capex Budget Allocations

R 182 242 719.80

R 160 000 000.00

R 180 000 000.00

R 107 984 891.03R 120 000 000.00

R 140 000 000.00

R 60 000 000.00

R 80 000 000.00

R 100 000 000.00

R 20 000 000.00

R 40 000 000.00

R 0.00

10/11 Budget 11/12 Budget

10/11 & 11/12 CAPEX - SPLITR 140 000 000.00

2010/11 and 2011/12 Capex Budget Allocations  (Expansion & Refurbishment)

R 118 968 719.80R 120 000 000.00

R 80 000 000.00

R 100 000 000.00

R40 872 280.20

R 67 112 610.83R 63 274 000.00

R 60 000 000.00

R 40 872 280.20

R 20 000 000.00

R 40 000 000.00

R 0.00

10/11 Budget (Expansion) 10/11 Budget (Refurbishments) 11/12 Budget (Expansion) 11/12 Budget (Refurbishment)

10/11 & 11/12 CAPEX - SPLIT/ /

R90 000 000 00

2010/11 and 2011/12 Capex Budget Allocations  (Regional Split)

R 79 200 000.00

R 70 000 000.00

R 80 000 000.00

R 90 000 000.00

R 53 751 505.00

R 63 536 719.80

R 50 000 000.00

R 60 000 000.00

R 28 080 000.00R 24 832 000.00

R 30 000 000.00

R 40 000 000.00

R 15 023 280.20R 11 130 105.83

R 14 674 000.00

R 10 000 000.00

R 20 000 000.00

R 0.00

10/11 Budget (MRR) 10/11 Budget (ORR) 10/11 Budget (CRR) 10/11 Budget (HQ & Other)

11/12 Budget (MRR) 11/12 Budget (ORR) 11/12 Budget (CRR) 11/12 Budget (HQ & Other)

12/13 CAPEX - TOTAL

12/13 CAPEX – REGIONAL SPLIT/

10/11; 11/12 & 12/13 –PERFORMANCEPERFORMANCE

Bulk Water Tariffs

• Regulated by MFMA Section 42 and Circular 2323

• WSA Section 4 ss(2), (3) and (4)

• PFMA Section 51 ss(1)(a)(i) and 51(b)(i)

Salient Features• Volume growth of 2-3%;

• Input costs increase aligned to tariffs increases

• CAPEX & Investment plan: 12/13 to 16/17p

• Improving profitability but returns still under pressure;

• Borrowing costs capitalized to assets;

• Retention of cash reserves

• Utilize reserves for refurbishments and loan repayments

D bt i ti f 25% i t i d• Debt service ratio of 25% maintained

WATER CONSUMPTION

120 000 000

ANNUAL: ACTUAL AND PROJECTED

80 000 000

100 000 000

ERS)

60 000 000

80 000 000

ON(CUB.METE

20 000 000

40 000 000

CONSU

MPTIO

0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

YEARACTUAL RAW TOTALPROJECTED TOTALACTUAL TREATED TOTALACTUAL  TREATED TOTAL

Bulk Water DemandBulk Water DemandBloem Water ‐ water sales

Projected increase factor 2013/14 and onwards  2% 2% 2% 3%

Actual/Estimate Year TOTAL - Bloem Water TOTAL - Caledon River TOTAL - Modder River TOTAL - Orange River RAW WATER

Year Actuals Estimates Actuals Estimates Actuals Estimates Actuals Estimates Actuals Estimates

Actual 2005 66 261 063 38 077 301 11 617 149 138 600 16 428 013

Actual 2006 70 619 814 40 768 541 11 460 007 2 035 407 16 355 859

Actual 2007 76 996 857 43 424 329 12 182 100 2 231 371 19 159 057

A t l 2008 79 996 565 45 367 808 12 284 936 2 699 494 19 644 327Actual 2008 79 996 565 45 367 808 12 284 936 2 699 494 19 644 327

Actual 2009 85 473 109 40 641 047 13 323 431 2 514 922 28 993 709

Actual 2010 88 735 234 43 767 500 14 260 679 2 565 896 28 141 159

Actual 2011 84 982 099 42 272 711 16 759 125 3 227 226 22 723 037

Actual 2012 89 991 033 49 989 101 17 240 278 4 177 842 18 583 812

Estimate 2013 91 032 545 47 645 545 17 482 000 3 905 000 22 000 000

Estimate 2014 93 073 196 48 598 456 17 831 640 3 983 100 22 660 000

Estimate 2015 95 161 260 49 570 425 18 188 273 4 062 762 23 339 800Estimate 2015 95 161 260 49 570 425 18 188 273 4 062 762 23 339 800

Estimate 2016 97 297 883 50 561 834 18 552 038 4 144 017 24 039 994

Estimate 2017 99 484 241 51 573 070 18 923 079 4 226 898 24 761 194

Estimate 2018 101 721 537 52 604 532 19 301 541 4 311 436 25 504 030

Budget: 2013/14• Consult with its municipal clients required by Section 42 MFMA & Circ 23.• The implication of the above incorporates the following major

components:- An increase in the raw water cost up to 16.6%- An increase in chemical cost: 10.2%- An increase in electricity cost: 19.6% plus additional requirements- An increase in human resources cost: 8% plus additional

requirementsrequirements

CAPEX: The proposed tariff will result in the downscaling of CAPEX projectsin future yearsin future years.

It impacts the National Treasury requirements regarding debt service ratios:restricting Bloem Water to obtain external funding for the debt servicerestricting Bloem Water to obtain external funding for the debt serviceratio above 25% and as aligned with the approved borrowing limits by DWAand NT

Budget: 2013/14Budget: 2013/14STATEMENT OF COMPREHENSIVE INCOME AND OTHER DETAIL

Budget 2013 (Revised) Forecast 2014 % Increase Cost Volume Other

R'000 R'000 Increase Increase Increase

Total Income 374 579 421 452 12.5% 11.0% 2.5%Revenue 361 483 410 241 13.5% 11.0% 2.5%Other operating income 1 843 1 861 1.0% 1.0%Finance income 11 252 9 350 -16.9% -16.9%

Total expenses 371 163 420 082 13 2%Total expenses 371 163 420 082 13.2%Water Purchased 24 825 27 347 10.2% 8.0% 2.2%Impairment of trade receivables 2 289 1 943 -15.1% -15.1%Chemicals 17 830 19 642 10.2% 8.0% 2.2%Depreciation - non-cash expense 40 525 47 470 17.1% 17.1%Distribution costs 11 697 13 452 15.0% 15.0%Energy 62 064 74 229 19.6% 16.0% 2.6% 1.0%Repairs and Maintenance 14 279 15 422 8.0% 8.0%Staff costs 113 929 128 740 13.0% 8.0% 5.0%Operating Expenses 46 472 50 189 8.0% 8.0%Finance expenses 37 252 41 648 11.8% 11.8%

Profit / (loss) for the year 3 416 1 371 -59.9%

What profit should be to fully cover capital component cost: 67 296 61 540 -8.6%Depreciation - non cash expense 40 525 47 470 17 1% 17 1%Depreciation non cash expense 40 525 47 470 17.1% 17.1%Pension fund - change in IAS19 - -13 068 Capital component - borrowings -78 513 -92 558 17.9% 17.9%Moveable assets -14 850 -10 000 -32.7% -32.7%Refurbishment -51 800 -48 100 -7.1% -7.1%

Cash reserves (internal funds) used to cover shortfall 63 880 60 170 5 8%Cash reserves (internal funds) used to cover shortfall -63 880 -60 170 -5.8%

600 000Expenditure

500 000

400 000

Finance expenses 23 906

300 000Rand value

Operating Expenses 21 211

Staff costs 67 415

Repairs and Maintenance 9 032

Energy 38 473

Distribution costs 7 379

200 000

Depreciation ‐ non‐cash expense 35 113

Chemicals 13 463

Impairment of trade receivables 14 965

Water Purchased 20 921

100 000

0Budget 2013 (Revised)

Forecast 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2018

YearYear

Operational, capital levy and shortfall

6.00

7.00

0.900 81

0.46

0.14

5.000.44

0.61

0.75

0 88

1.06

0.82

0.81

4.00 0.25

0.290.88

Tariff ‐Rand value Capital levy shortfall for proposed tariff  ‐ capital component and building reserves with depreciation for future replacement)

2.00

3.00

3.694.08

4.414.78

5.185.62 Capital levy (included in tariff)

Operational tariff

1.00

0.00Budget 2013 

(Revised)

Forecast 2014

Forecast 2015

Forecast 2016

Forecast 2017

Forecast 2018

Year

Budget: 2013/14gSTATEMENT OF COMPREHENSIVE INCOME AND OTHER DETAIL(incl tariff increases)

Budget 2013 (Revised) Forecast 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2018

R'000 R'000 R'000 R'000 R'000 R'000

Sales volumes - kl 91 032 545 93 073 196 95 161 260 97 297 883 99 484 241 101 721 537 - Purified - kl 69 032 545 70 413 196 71 821 460 73 257 889 74 723 047 76 217 508 - Raw - kl 22 000 000 22 660 000 23 339 800 24 039 994 24 761 194 25 504 030

Abstraction volumes - kl 82 839 054 84 495 835 86 185 752 87 909 467 89 667 656 91 461 009

Tariff - R (Actual and proposed) 3.94 4.37 4.85 5.39 5.93 6.52Operational tariff 3 69 4 08 4 41 4 78 5 18 5 62Operational tariff 3.69 4.08 4.41 4.78 5.18 5.62Capital levy (included in tariff) 0.25 0.29 0.44 0.61 0.75 0.90Capital levy shortfall for proposed tariff - capital component and building reserves with depreciation for future replacement) 0.88 1.06 0.82 0.81 0.46 0.14% increase 12.57% 11.00% 11.00% 11.00% 10.00% 10.00%

Total Income 374 579 421 452 472 689 533 875 599 520 675 046Total Income 374 579 421 452 472 689 533 875 599 520 675 046Revenue 361 483 410 241 465 584 528 401 594 302 668 434Other operating income 1 843 1 861 1 880 1 899 1 918 1 937Finance income 11 252 9 350 5 225 3 575 3 300 4 675

Total expenses 373 376 421 249 457 892 498 742 542 536 594 558Water Purchased 24 525 27 016 29 761 32 785 36 116 39 785Water Purchased 24 525 27 016 29 761 32 785 36 116 39 785Impairment of trade receivables 2 205 615 1 381 1 536 1 693 1 866Chemicals 17 560 19 344 21 309 23 474 25 860 28 487Depreciation - non-cash expense 40 525 47 470 49 910 53 006 55 280 57 629Distribution costs 11 987 13 786 15 853 18 231 20 966 24 111Energy 62 064 74 229 88 780 106 185 127 004 151 908Repairs and Maintenance 14 167 15 301 16 525 17 847 19 274 20 816Staff costs 114 073 128 902 139 215 150 352 162 380 175 370Operating Expenses 49 017 52 938 57 173 61 747 66 687 72 022Finance expenses 37 252 41 648 37 984 33 579 27 276 22 564

Profit / (loss) for the year 1 203 203 14 797 35 133 56 984 80 488

Budget: 2013/14g

250 000 

300 000 

Cash and cash equivalents/Investment (B/S)

STATEMENT OF FINANCIAL POSITIONBudget 2013

(Revised) Forecast 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2018

150 000 

200 000 

256 308 

238 038 

Rand value

Cash and cash equivalents/Investment  (B/S)

Assets 1 094 780 1 128 337 1 105 860 1 096 417 1 104 258 1 146 175

Property, plant and equipment 894 635 984 266 981 356 988 471 976 868 964 420

‐

50 000 

100 000 

Actual 2011 Actual 2012 Budget 2013 

(Revised)

Forecast 2014

Forecast 2015

Forecast 2016

Forecast 2017

Forecast 2018

146 016 

100 579 

79 101 

60 522 78 256 

130 862 

Employee Benefits 13 068 - - - - -

Inventory 9 790 10 784 11 880 13 087 14 417 15 881

Trade and Other Receivables 57 111 64 199 71 479 79 587 87 820 96 908 Year

Short-term investments 120 000 69 000 41 000 15 000 25 000 68 000

Cash and Cash Equivalents 176 88 145 273 154 966

400 000

450 000

Treasury approved borrowing limits vs Interest Bearing Borrowings

Equity and liabilities 1 094 780 1 128 337 1 105 860 1 096 417 1 104 258 1 146 175

Equity 685 412 685 615 700 412 735 545 792 529 873 017

Interest bearing borrowings 356 901 384 925 341 779 290 735 234 466 188 044 150 000

200 000

250 000

300 000

350 000

Rand value

Treasury approved borrowing  limits

Interest Bearing Borrowings  (B/S)

Current - Interest bearing borrowings 50 910 57 274 64 468 56 186 46 333 46 333

Long term - interest bearing borrowings 305 991 327 650 277 311 234 549 188 133 141 711

Trade and other payables 52 466 57 797 63 669 70 138 77 264 85 114

0

50 000

100 000

Actual 2011 Actual 2012 Budget 2013 (Revised)

Forecast 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2018

Years

y

Budget: 2013/14gFINANCIAL INDICATORS AND RATIOS

Budget 2013 (Revised) Forecast 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2018

Cost of raw water (Rand/kl) based on abstraction volumes 0.30 0.32 0.35 0.37 0.40 0.43Total cost/volume (Rand/kl) - excluding capital component and finance cost based on sale vol 3 69 4 08 4 41 4 78 5 18 5 62Total cost/volume (Rand/kl) - excluding capital component and finance cost based on sale vol 3.69 4.08 4.41 4.78 5.18 5.62Finance costs (Rand/kl) - based on sales volumes 0.41 0.45 0.40 0.35 0.27 0.22

LIQUIDITYCurrent ratio (current assets divided by current liabilities) 1.81 1.25 0.97 0.85 1.03 1.38Debt-equity ratio (total liabilities divided by total accumulated reserves) 0.60 0.65 0.58 0.49 0.39 0.31Asset Test ratio/quick ratio (current assets-inventories)/current liabilities 0.43 0.30 0.28 0.26 0.36 0.61

SOLVENCYDebt service/interest cover ratio (income before interest & taxes divided by interest) 0.73 0.78 1.25 1.94 2.97 4.36Debt ratio (total debt divided by total assets) 0.37 0.39 0.37 0.33 0.28 0.24

PROFITABILITYCurrent asset turnover (revenue divided by current assets) 1.93 2.85 3.74 4.90 4.67 3.68

0 02 0 03 0 04 0 06 0 07 0 09Return on assets (income before interest & taxes divided by total assets) 0.02 0.03 0.04 0.06 0.07 0.09Asset turnover (revenue divided by total assets) 0.33 0.36 0.42 0.48 0.54 0.58Gross margin % based on operating profit (Operating profit divided by revenue) -0.07 -0.08 -0.04 0.01 0.06 0.09Gross margin % based on gross income (Gross income divided by revenue) 0.93 0.93 0.94 0.94 0.94 0.94

ACTIVITY/OPERATINGFixed asset turnover (revenue divided by fixed assets) 0.40 0.42 0.47 0.53 0.61 0.69Inventory turnover (cost of maintenance materials divided by inventory) 1.45 1.42 1.39 1.36 1.34 1.31Debtors collection period (debtors divided by revenue times 365) 57.67 57.12 56.04 54.98 53.94 52.92Creditors days (trade payables divided by expenses (excl depreciation & staff cost) times 26.70 26.03 25.33 24.59 23.83 23.04Accounts receivable turnover (revenue divided by accounts receivable) 6.33 6.39 6.51 6.64 6.77 6.90Working ratio (operating expenses divided by operating revenues) 0.93 0.93 0.90 0.88 0.87 0.86Controllable working ratio (operating expenses exclud.raw water, deprec & inter. divided by 0.75 0.74 0.73 0.72 0.71 0.71Weighted Average Cost of Capital (WACC) 0.09 0.09 0.09 0.09 0.09 0.08

SURPLUS RATIOSAccounting surplus/fixed assets 0.00 0.00 0.02 0.04 0.06 0.08Accounting surplus/revenue 0.00 0.00 0.03 0.07 0.10 0.12

Water Tariff increases: 2013/14Water Tariff increases: 2013/14

• The consultation process resulted in certain municipalities notingthe 11% increase in tariff to R4.37, while others did not respond.

• Following the above, consultation with National Treasury, SALGAand DWA ensued. Result:

- NT supported the increase although not cost reflective tariff- DWA and Minister of Water and Environmental Affairs

supported the increase subject to Eskom ratessupported the increase subject to Eskom rates- SALGA supported the increase subject to Eskom rates

• Impact – Still under recovering for the period 2013/16, affectingcash position

Acting Chief Executive:

Skills Development and Job Creation Skills Development and Job Creation

For the year 2011/12, Bloem Water ‘s Skills Development Plan had

incorporated the Free State Government Key priorities in support of

programs and priorities of the National Government as it effectively

constitutes Bloem Water's mandate as a State-owned entity. The

programmes are still continuing for the current financial year 2012/13.

Bloem Water has been engaged in different training and development

projects which are initiated to meet the challenges of the aging

workforce and scarce skill.

Learnership Programme

10

Females Males

7

5

3

2

3 3

0

Water Care Electrical Artisan Mechanical Artisan Supply Function

J b C ti f th lJob Creation for the learnersThe learners were trained in different NQF levels in water care which isan approved qualification in collaboration with the EWSETA and thetechnical learners completed their trade certification to qualify asartisans. The employees who completed their training were appointedin different employment categories in the organisation which includesthe water treatment process controllers, junior project engineers,junior artisans (mechanical and electrical) and maintenancetechnicians.

Bloem Water, through its activities, remain committed and putemphasis on driving values of creating and sharing knowledge acrossmultiple performance levels, thus aligning all the projects andg g jprogrammes with the strategic objectives and the Key Priorities asoutlined in the Government Manifesto.

Employment opportunities d /created – CAPEX 11/12

140

115120

7880

100

60

33

20

40

3

0

TOTAL NUMBER   OF JOBS CREATED MALE FEMALE YOUTH PEOPLE WITH DISABILITIES

COMPLIANCE WITH PAJACOMPLIANCE WITH PAJAThe Promotion of Administrative Justice

Act, Act 3 of 2000

• Bloem Water is fully compliant with the provision of PAJA

l h l d l h– Bloem Water has policies and systems in place that:• Promotes Transparency• Promotes Fairness• Promotes Fairness• Promotes Lawfulness• Promotes giving of reasons for all administrative

actions

COMPLIANCE WITH PAIAThe Promotion of Access to Information

Act, Act 2 of 2000l f ll l h h• Bloem Water is fully compliant with the provision

of PAIAThe Chief Executive as information officer ensures that:– The Chief Executive as information officer ensures that:

– The public;– The stake holders;;– The employeesHave access to relevant information as classified in the Act.(Website, annual report and information that gets

requested)

BOARD PERFORMANCEBOARD PERFORMANCE

• Bloem Water board in 2012 was assessed by IOD;• Assessment scope included the assessment of Board

Members individually; Board Committees and the Board as a Members individually; Board Committees and the Board as a whole;

• Of the 43 areas assessed only 5 of them (being 12%) scored b l 3below 3;

• The IOD concluded that the Board has significantly more areas that are viewed as performing well as compared to p g pareas needing improvement.

Current Challenges Experienced- Deteriorating raw water quality as a result of

inadequate catchment management

- Delays is issuing Abstraction permits

- Availability of Water Resources

- Payment Default risk by municipalities

- Sustainable tariff structureSustainable tariff structure

- Ageing infrastructure –rollout of CAPEX program

within resource constraints v/s demandwithin resource constraints v/s demand

- Experiencing rising input costs, i.e. Chemicals, raw

dwater, energy and O & M cost

- Failing WC/WDM

Support/Expectation from DWA• Shareholder compact;

– Mitigation of siltation at WeldamIncrease pumping capacity at Tienfontein– Increase pumping capacity at Tienfontein

– Catchment/Pollution management– Increase Groothoek dam capacity – Concluding of SLA with WSA– Intervention on debt owed by WSA– Implement Jagersfontein phase 2 project Implement Jagersfontein phase 2 project. – Investigate Jagersfontein phase 1 project.– Institutional reform – Transfer of Masselspoort

WTWWTW– Lead role in WC/WDM initiatives– Secure funding for interventions outlined in the

Greater Bloemfontein Reconciliation Study– Tariff application processes

Support/Expectation from DWA (Cont)(Cont)

• Meeting/Workshop between DWA and WB - 01/02/201MWIG program Schedule 6 v/s Schedule 7– MWIG program - Schedule 6 v/s Schedule 7

– Guidelines regarding “financial” assistance to WSA – Improved co-operations and alignment amongst stakeholders– Long term commitment by DWA regarding water infrastructure projects– Updated IA guidelines– Improved planning – Decision/clarity regarding assets transfer– Political support/buy regarding WSA support (i.e. MWIG program)– Decision/clarity regarding Regional Water Utilities (Border to border)Decision/clarity regarding Regional Water Utilities (Border to border)– Adoption/Implementation of the tariff model (WRC study)– Legislative revision regarding Regional Water Utilities

Define project completion guidelines– Define project completion guidelines– Development of the Provincial Bulk Master Plans– Interface between RRU & WB

Sustainability Initiatives/CSIHydro Power Conduit- Hydro Power – Conduit

- School Sanitation Programme

- Solar powered boreholes

- Hippo rollers

THANK YOU